Feds reportedly open criminal probe into crypto prices


It is important to understand that the U.S. Department of Justice made a decision to open an investigation that will analyse whether crypto traders have been manipulating the price of Bitcoin or not. These include spoofing the market with fake orders to trick other traders, and wash trading to create fake trading volume.

Bloomberg reported that the Justice Department was working with the Commodity Futures Trading Commission, which oversees cryptocurrency derivatives, for the investigation.

USA authorities are concerned that fraudsters are manipulating the nascent, unregulated virtual markets by sending up or shooting down the currencies' price valuations to make a profit.

Bitcoin hit a record high of $US19,783.06 in December of 2017 after the cryptocurrency craze had been building throughout previous year.

Spokespeople for the Justice Department and the CFTC didn't immediately return requests for comment.

Unfortunately, a regulatory being goes against numerous principles behind a "decentralised" cryptocurrency, and handing control to a centralised authority would push investors away from the platforms. This apparently involves overloading the market with buy or sell orders artificially to send prices up or down and then cancelling the orders after profiting from the price change.

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To this effect, digital asset exchanges Gemini and Coinbase have cautiously treaded the cryptocurrency sector, placing a high emphasis on regulatory and internal fraud control.

Earlier this year, the Securities and Exchange Commission launched a broad investigation into bitcoin-like "tokens" that are issued by companies through so-called "initial coin offerings".

Cryptocurrency trading is fragmented on dozens of platforms across the globe and many aren't registered with the CFTC or SEC. But if the agency finds fraud in spot markets, it does have authority to impose sanctions. "It would be easy to spoof this market".

Claims about price manipulation in digital currency have been circulating for years, but to date, there has been little concrete evidence that trading conspiracies exist.

Signs are emerging that some crypto exchanges realize the industry's growth could be constrained if large swaths of investors conclude that trading platforms have a "buyer beware" approach to oversight.

The crypto market is mostly unregulated, making price manipulation a possibility. The trader dominated the BTC price by reportedly placing the order of $1 million without executing them.